TORONTO – SMTC Corp. reported March quarter revenue of $55.1 million and net income of $400,000 For its first quarter ended March 30, sales were down 20.3% and profits were off 86% versus last year. However, net income for the first quarter of 2007 included a $1.8 million tax recovery and related interest.  For the quarter, gross profit was $4.4 million, or 8% of revenue, compared with $6.4 million, or 9.6% of revenue last year. Cash from operations was $1.7 million. Net debt was reduced to $19.5 million, the EMS company’s lowest level since 1998.

"Despite lower first quarter revenue, we continued to be profitable and generate cash. Importantly, we retained our proportionate share of business with our customers. Through the quarter, several new customers began to ramp production,” said John Caldwell, president and chief executive, in a statement.

"We made considerable progress in successfully qualifying production at our new locations in China and Mexico. The China operations will significantly ramp production in the second quarter while Mexico is expected to increase activity levels in the second half of the year.”

SMTC guided for significantly higher sequential revenues and reaffirmed its full-year guidance with both revenue and earnings growth on stronger second-half revenue.

Separately, SMTC announced today a new outsourcing deal to build assemblies for Thales Rail Signaling Solutions. No financial terms were disclosed.

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